Electric vehicle profitability is a lot closer than some think, says General Motors. Its investors will be happy to hear that.
General Motors CEO Mary Barra announced this week in New York City that its fast-growing electric vehicle portfolio will produce profits in 2025. We reported a few days ago this announcement was expected, and now more details are available directly from America's largest automaker. GM will continue scaling EV capacity to over 1 million units annually. In addition, plans are in place to boost other revenue sources, specifically with software, and to generate greenhouse gas benefits and take advantage of new clean energy tax credits.
"GM's ability to grow EV sales is the payoff for many years of investment in R&D, design, engineering, manufacturing, our supply chain, and a new EV customer experience that is designed to be the best in the industry," said GM Chair and CEO Mary Barra. "Our multi-brand, multi-segment, multi-price point EV strategy gives us incredible leverage to grow revenue and market share, and we believe our Ultium Platform and vertical integration will allow us to continuously improve battery performance and costs."
Over the next three years, the conglomerate will continue expanding its EV offerings, among them trucks, SUVs, and luxury vehicles, representing about 70% of EV industry volume. These will include the GMC Sierra EV and its Silverado EV cousin, the Blazer EV and the Equinox EV, and the Cadillac Lyriq.
The carmaker also has plans to launch a new digital retail platform with its dealerships in order to improve the buying experience for EV customers. GM estimates this to help reduce an estimated $2,000 in costs per vehicle. All told, there will be five North American plants building EVs. BrightDrop, GM's electric delivery van division, is on track to earn $1 billion in revenue in 2023.
Production of the Zevo 600 van is set to begin next year as well, scaling to a projected 50,000 units annually by 2025. The Ultium Cells joint battery venture will have plants up and running in three states by the end of 2024, and a fourth plant is planned. Equally important, GM says it has secured binding commitments for the necessary raw battery materials in order to meet its 2025 goal. Further commitments with key suppliers beyond 2025 are in the works. "We've built the foundation to rapidly scale our EV portfolio, make it profitable and maintain strong margins during a period of high investment," said CFO Paul Jacobson.
Meanwhile, GM's EV and sustainability projects continue to be funded by internal combustion engine vehicle sales, specifically trucks and SUVs.
Additional financial news includes total company revenue growing at a 12% annual rate through 2025, hitting over $225 billion as EV numbers and software revenue increase. EV revenue alone is expected to exceed $50 billion in three years' time.
All told, over 400,000 GM EVs will be built in North America from this year through the first half of 2024, increasing to over 1 million in 2025. Slashing battery cell costs is another key goal; by the mid-to-late decade, that figure is estimated to be below $70/kWh.